These short-term, limited-duration insurance (STLDI) plan rules expand the duration of these “junk” plans from three months to up to three years, changing them from stopgap plans to an illusory “alternative” to health plans that offer comprehensive coverage and play by the rules.
Short-term plans threaten to undermine consumer protections for people with pre-existing conditions. They can deny coverage or charge more based on age, gender or health status. They can exclude services like maternity or mental health; impose unlimited deductibles; reimpose annual or lifetime limits on insurance benefits; and not pay for treatment of a pre-existing condition. To stop the expansion of these plans, seven health organizations filed suit in the U.S. District Court for the District of Columbia on September 14, 2018 to invalidate the STLDI plan rule.
The final rule violates the plain-English meaning of “short-term” by defining it as 364 days instead of three months, as currently allowed, and the meaning of “limited duration” which it defines as up to 36 instead of 12 months. The rule arbitrarily reverses previous limits on these plans to create an “alternative” to ACA-compliant plans that Congress did not authorize. That violates the law as set forth in the ACA by effectively undercutting plans that comply with the ACA and making them increasingly unaffordable and unsustainable for consumers who have nowhere else to turn.
Here's What's At Stake.
The STLDI plan rule expands the availability of discriminatory, inadequate short-term “junk” plans, which can:
– Set higher premiums based on age, gender, and health status,
– Deny access to basic benefits,
– Undermine catastrophic cost protections,
– Deny coverage for any pre-existing condition, and
– Increase uncompensated care for health care providers.
Their substandard coverage will surely increase the number of Americans facing unexpected and unaffordable medical bills.
Examples of the real-world consequences of these “junk” plans cited in the complaint include:
– A woman in Illinois went to the hospital with heavy vaginal bleeding resulting in a five-day hospital stay and a hysterectomy, only to be denied coverage under her short-term plan on the ground that her menstrual cycle constituted a pre-existing condition.
– A man in Washington, D.C., purchased a short-term plan with a stated maximum payout of $750,000; when he sought coverage for a $211,000 bill resulting from a hospitalization, he was paid only $11,780, in part due to a denial of coverage based on his father’s medical history.
Under the STLDI plan rule, access to quality coverage will be threatened — whether a family buys a short-term plan or not. Middle-income families with comprehensive coverage will see their premiums increase, because new STLDI plans will lure healthy people out of the quality plans that include consumer safeguards. The final rule itself assumes premiums in the individual market will rise by 5 percent and cost taxpayers nearly $30 billion over 10 years. Also, insurers providing high-quality plans could drop out of regular insurance markets due to uncertainty, unfair competition, or profits to be gained by the shadow market for short-term plans. Short-term plans do not have to meet marketwide standards such as ensuring most premium dollars are used for health benefits or that sufficient doctors and hospitals are in the plan’s network. Furthermore, STLDIs are not subject to mental health parity nor the non-discrimination rules that protect people with conditions like HIV/AIDS.
The administration is letting expanded short-term plans be sold starting October 2, 2018. Rushing the sale of short-term plans will undercut health plans that play by the rules and will confuse consumers when they are signing up for 2019 coverage starting on November 1.